PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

FRONT RANGE EQUINE RESCUE; THE 

HUMANE SOCIETY OF THE UNITED 

STATES; MARIN HUMANE SOCIETY; 

HORSES FOR LIFE FOUNDATION; 

RETURN TO FREEDOM; RAMONA 

CORDOVA; KRYSTLE SMITH; CASSIE 

GROSS; DEBORAH TRAHAN; 

BARBARA SINK; CHIEF DAVID BALD 

EAGLE; CHIEF ARVOL LOOKING 

HORSE; TANYA LITTLEWOLF; 

ROXANNE TALLTREE-DOUGLAS; 

FOUNDATION TO PROTECT NEW 

MEXICO WILDLIFE; SANDY 

SCHAEFER, 

 Plaintiffs - Appellees,

and 

STATE OF NEW MEXICO, 

 Intervenor Plaintiff - Appellee, 

v. 

TOM VILSACK, Secretary, United States 

Department of Agriculture; ELIZABETH 

A. HAGEN, Under Secretary for Food 

Safety, United States Department of 

Agriculture; ALFRED A. ALMANZA, 

Administrator, Food Safety and Inspection 

Services, United States Department of 

Agriculture, 

 Defendants, 

No. 16-2054 

FILED 

United States Court of Appeals

Tenth Circuit 

January 4, 2017

Elisabeth A. Shumaker 

Clerk of Court
2 

RESPONSIBLE TRANSPORTATION, 

LLC; CONFEDERATED TRIBES AND 

BANDS OF THE YAKAMA NATION; 

RAINS NATURAL MEATS; 

CHEVALINE, LLC; INTERNATIONAL 

EQUINE BUSINESS ASSOCIATION; 

NEW MEXICO CATTLEGROWERS’ 

ASSOCIATION; SOUTH DAKOTA 

STOCKGROWERS ASSOCIATION; 

RANCHERS-CATTLEMEN ACTION 

LEGAL FUND UNITED 

STOCKGROWERS OF AMERICA; 

MARCY BRITTON; BILL WOOD; JAN 

WOOD; LEROY WETZ; SHIRLEY 

WETZ; DOUG JOHNSON; JUDY 

JOHNSON; KUJYUKURI, LTD; UNITED 

HORSEMEN; SCENIC VIEW RANCH, 

 Intervenors Defendants, 

and 

VALLEY MEAT COMPANY, LLC, 

 Intervenor Defendant - Appellant. 

_________________________________ 

Appeal from the United States District Court 

for the District of New Mexico 

(D.C. No. 1:13-CV-00639-MCA-KK)

_________________________________ 

A. Blair Dunn (Dori E. Richards with her on the briefs), Western Agriculture, Resource 

and Business Advocates, LLP, Albuquerque, New Mexico for Intervenor DefendantAppellant. 

Adam Diederich, Schiff Hardin, LLP, Chicago, Illinois (Bruce A. Wagman, Schiff 

Hardin LLP, San Francisco, California; Samuel C. Wolf, Jones, Snead, Wertheim & 

Clifford, P.A, Santa Fe, New Mexico, and Ari Biernoff, Office of the Attorney General, 

Santa Fe, New Mexico, with him on the briefs) for Plaintiffs-Appellees and Intervenor 

Plaintiff-Appellee. 

_________________________________ 
3 

Before HOLMES, MATHESON, and McHUGH, Circuit Judges. 

_________________________________ 

McHUGH, Circuit Judge. 

_________________________________ 

 Valley Meat Company, LLC appeals the district court’s denial of its motion to 

collect on an injunction bond. Exercising jurisdiction under 28 U.S.C. § 1291, we 

affirm. 

I. BACKGROUND 

The Food Safety Inspection Service (FSIS), a branch of the United States 

Department of Agriculture (USDA), is responsible for inspecting equine 

slaughterhouses, and a grant of inspection is required for the commercial slaughter of 

horses, mules, and other equines for human consumption. 21 U.S.C. § 603(a). 

Between fiscal years 2006 and 2011, Congress prohibited the use of funds for 

inspection, thereby preventing commercial equine slaughter. In fiscal year 2012, 

Congress lifted the ban on funding and FSIS received several applications for 

inspection. The agency issued grants of inspection to two commercial equine 

slaughter facilities: Valley Meat Company, LLC and Responsible Transportation, 

LLC.1

 

In response, Front Range Equine Rescue, the Humane Society of the United 

States, and several other individuals and organizations (collectively, “Front Range”) 

sued officials of the USDA (“Federal Defendants”), seeking a declaration that grants 

 1

 A third facility, Rains Natural Meats, applied for inspection, but FSIS was 

not able to issue a grant of inspection before the initiation of this lawsuit. 
4 

of inspection generally violated the National Environmental Policy Act and 

requesting that the court set aside the specific grants of inspection to Valley Meat and 

Responsible Transportation. Front Range also moved to enjoin the Federal 

Defendants from authorizing equine slaughter during the pendency of the claims. 

Subsequently, Valley Meat and Responsible Transportation each filed motions to 

intervene, which the district court granted.2

The district court then granted Front Range’s motion for a temporary 

restraining order (TRO), prohibiting the Federal Defendants from sending inspectors 

to the equine slaughterhouses of, or otherwise providing equine inspection services 

to, Valley Meat and Responsible Transportation. The court additionally sua sponte

enjoined Valley Meat and Responsible Transportation from engaging in commercial 

equine slaughter. Finally, the court ordered Front Range to post injunction bonds of 

$435,000 for Valley Meat and $60,000 for Responsible Transportation, “for the time 

period August 5, 2013 through September 1, 2013.” Twelve days later, Front Range 

filed a motion to modify the TRO, an objection to the order requiring it to post an 

injunction bond, and a request for expedited review. Front Range claimed the 

injunction against Valley Meat and Responsible Transportation was invalid because 

Front Range had sued and sought relief from only the Federal Defendants. Without 

waiving this objection, Front Range posted the bond as ordered. Valley Meat opposed 

Front Range’s motion, arguing that it should be restrained and Front Range should be 

 2

 Rains Natural Meats also intervened, but was not subject to the TRO. 
5 

required to post the bond because an injunction against the Federal Defendants 

effectively also enjoins its operations. 

The district court never ruled on Front Range’s motion, but on November 1, 

2013, it denied Front Range’s request for a permanent injunction and dismissed the 

action. Front Range immediately appealed the decision to this court. In order to 

provide adequate time to consider the merits, we temporarily enjoined the Federal 

Defendants from sending inspectors but did not enjoin Valley Meat or Responsible 

Transportation. 

We subsequently dismissed the appeal as moot in Front Range Equine Rescue 

v. Vilsack, 782 F.3d 565 (10th Cir. 2015) [hereinafter Front Range I]. We first 

concluded the appeal was moot because Congress resumed its funding prohibition for 

equine inspections beginning in 2014, making it once again unlawful to engage in 

commercial equine slaughter for human consumption. Id. at 568. And second, we 

noted that while the appeal was pending, Valley Meat “decided to abandon all plans 

to slaughter equines and asked FSIS to withdraw its grant of inspection.” Id. 

Upon concluding that the matter was moot, we vacated the district court’s 

order denying a permanent injunction, “based on the underlying equitable principle 

that a party should not have to bear the consequences of an adverse ruling when 

frustrated by the vagaries of the circumstances.” Id. at 571 (alterations and internal 

quotation marks omitted). And the “vagaries of the circumstances” we identified here 

were unilateral actions taken by Valley Meat and Congress, not any actions taken by 

Front Range. 
6 

Valley Meat and Responsible Transportation then filed a motion in the district 

court to recover the injunction bond. A magistrate judge recommended that the 

motion be denied, and the district court adopted the magistrate’s recommendation in 

full. Valley Meat now appeals the denial of damages on the injunction bond.3

II. DISCUSSION 

As a prerequisite to the issuance of a preliminary injunction, Federal Rule of 

Civil Procedure 65(c) requires the moving party to post a security bond “to pay the 

costs and damages sustained by any party found to have been wrongfully enjoined or 

restrained.” Fed. R. Civ. P. 65(c). We review a district court’s decision to grant or 

deny damages on a bond for abuse of discretion, which occurs when the court “(1) 

enters ‘an arbitrary, capricious, whimsical, or manifestly unreasonable judgment’ or 

(2) applies the wrong legal standard.” Sprint Nextel Corp. v. Middle Man, Inc., 822 

F.3d 524, 535 (10th Cir. 2016) (citation omitted). 

Here the parties dispute what the correct legal standard is. Front Range cites 

Tenth Circuit precedent, which holds that “the decision whether to award damages, 

and the extent thereof, is in the discretion of the district court and is based upon 

considerations of equity and justice.” Kansas ex rel. Stephan v. Adams, 705 F.2d 

1267, 1269 (10th Cir. 1983); see also Sierra Club v. Hodel, 848 F.2d 1068, 1097 

(10th Cir. 1988); Monroe Div., Litton Bus. Sys., Inc. v. De Bari, 562 F.2d 30, 33 

(10th Cir. 1977) (“Equity comes into play in determining whether there may be 

recovery and the amount thereof.”); Robson v. R & R Fur Co., 1993 WL 34680, at *2 

 3

 Responsible Transportation does not join in the appeal. 
7 

(10th Cir. Feb. 8, 1993) (unpublished) (“Following a determination that damages 

were suffered, the district court exercises its equity powers in deciding whether to 

award damages against the bond and in what amount.”).

Valley Meat cites to cases from other circuits that it contends apply a different 

standard of review for denial of recovery under a bond posted under Rule 65(c). See

Coyne-Delany Co. v. Capital Dev. Bd. of State of Ill., 717 F.2d 385, 391 (7th Cir. 

1983) (“[A] prevailing defendant is entitled to damages on the injunction bond unless 

there is a good reason for not requiring the plaintiff to pay in the particular case.”); 

Nat’l Kidney Patients Ass’n v. Sullivan, 958 F.2d 1127, 1134 (D.C. Cir. 1992) (“The 

preference for allowance of damages is a solid one; it justifies disallowance only 

where there is good reason.”). 

However, neither the parties nor the district court relied on our earlier 

precedent in Atomic Oil Co. of Okl. v. Bardahl Oil Co.,

4

 which severely constricts the 

scope of a district court’s discretion to deny recovery to a wrongfully enjoined party. 

419 F.2d 1097 (10th Cir. 1969). There, a panel of this court noted that “the discretion 

of the trial court to refuse to award damages on an injunction bond in an appropriate 

case has been largely circumscribed since the existence of Rule 65(c) and its 

predecessor.” 419 F.3d at 1100. We further explained: 

The manifest purpose of Rule 65(c), evidenced by its plain language, 

strongly contraindicates the proposition that the court which issues an 

injunction should have the power to foreclose recovery on the injunction 

bond, when such recovery devolves upon the substantive correctness of 

 4

 Valley Meat mentions this case in its Opening Brief, but does so for an 

unrelated proposition. 
8 

the determinations of the very same court. Rule 65(c) states in 

mandatory language that the giving of security is an absolute condition 

precedent to the issuance of a preliminary injunction. It imports no 

discretion to the trial court to mitigate or nullify that undertaking after 

the injunction has issued.

Id. at 1100–01 (emphasis added). The limits on a district court’s discretion under 

Atomic Oil appear to conflict with the broad discretion to award or deny damages 

“based upon considerations of equity and justice” outlined in Stephan. And in this 

circuit, “we are obligated to follow the earlier panel decision over the later one.” 

Hiller v. Okla. ex rel. Used Motor Vehicle & Parts Comm’n, 327 F.3d 1247, 1251 

(10th Cir. 2003). Therefore, where there is a finding that a defendant has been 

wrongfully enjoined, there is a presumption of recovery and the district court’s 

discretion to deny damages is limited. 

Here, the district court based its decision to deny Valley Meat’s motion to 

collect on three independent grounds: (1) there was never a finding that Valley Meat 

was wrongfully enjoined, nor did Valley Meat request such a finding; (2) Front 

Range never sued Valley Meat nor asked for it to be enjoined, rather the court 

restrained Valley Meat sua sponte; and (3) it would be inequitable to award damages 

where Front Range raised legitimate environmental concerns and litigated in good 

faith. Although the district court’s analysis goes beyond that sanctioned by Atomic 

Oil, we affirm because Atomic Oil’s presumption in favor of damages does not apply 

where there was never a finding of wrongful enjoinment. 
9 

A. There Is No Finding that Valley Meat Was Wrongfully Enjoined 

Valley Meat argues it was wrongfully enjoined, and that even though this court 

vacated the district court’s denial of a permanent injunction, “a district court must 

retain jurisdiction to award costs and damages from a bond despite the vitiating of the 

underlying suit.” In Atomic Oil Co. of Oklahoma v. Bardahl Oil Co., we recognized a 

defendant’s right to recover damages on an injunction bond. 419 F.2d 1097, 1101 

(10th Cir. 1969). But a prerequisite to recovery is a finding that the defendant was 

wrongfully enjoined. See Fed. R. Civ. P. 65(c) (explaining the purpose of the bond is 

“to pay the costs and damages sustained by any party found to have been wrongfully 

enjoined”); Robson, 1993 WL 34680, at *2 (“[T]o prevail in an action to recover on 

[an] injunction bond, [the defendant] must prove that the injunction was wrongful 

and that he did have the right to engage in the enterprises enjoined.”). 

On appeal, Valley Meat argues it was wrongfully enjoined because it was a 

“prevailing party” after the district court denied a permanent injunction. But there has 

never been a ruling that Valley Meat was wrongfully enjoined. Although the district 

court denied a permanent injunction, we vacated that order. We did so after 

concluding the appeal was moot both because Valley Meat had withdrawn its 

application for inspection and because Congress had defunded FSIS equine 

inspections, thereby again prohibiting commercial equine slaughter in the United 

States. The purpose of vacating the order was to preclude it “from spawning any legal 

consequences,” Rio Grande Silvery Minnow v. Bureau of Reclamation, 601 F.3d 

1096, 1132 (10th Cir. 2010). We accordingly reject Valley Meat’s suggestion that the 
10 

district court’s order denying a permanent injunction can be relied upon to show 

wrongful enjoinment. 

Valley Meat has also failed to point us to any place in the record where it 

sought a determination, from either the district court or this court, that it had been 

wrongfully restrained. Valley Meat instead focuses on the damages it claims to have 

sustained from the injunction, to argue the district court improperly denied recovery. 

Valley Meat contends that “[i]ssuance of the bond to compensate for [Valley Meat’s] 

damages is a collateral matter which the District Court continued to have jurisdiction 

to resolve.” And it points to the district court’s finding at the bond hearing that 

Valley Meat would “suffer harm and injury by virtue of the temporary restraining 

order . . . . The amount of these damages and losses are ascertainable.” Even if 

Valley Meat did suffer damages as a result of the TRO,5

 it cannot recover against the 

bond unless it first shows wrongful enjoinment. As discussed, it has failed to do so. 

Accordingly, the district court did not abuse its discretion in denying recovery 

against the injunction bond because there was never a ruling that Valley Meat was 

wrongfully enjoined. This conclusion alone is enough to affirm the district court’s 

decision. 

 5

 The district court found that while Valley Meat “failed to profit from [its] 

investment in a controversial, high-risk, and ultimately evanescent business during 

the few months when it may otherwise have been permitted, the record is unclear 

regarding whether the Court’s TRO alone was responsible for this situation. . . . The 

record is also unclear regarding whether Valley Meat’s . . . lost profits, even if 

proximately caused by the TRO, were as high as predicted.” 
11 

III. CONCLUSION 

The district court did not abuse its discretion in concluding that Valley Meat 

could not collect damages where there had been no finding that it was wrongfully 

enjoined. We therefore AFFIRM the district court’s denial of Valley Meat’s motion 

to recover damages against the injunction bond.